New-to-credit borrowing declines by 21 pc as lenders tighten consumption-driven loan issuances

Lenders remained cautious about issuing consumption-driven loans, with loans to new-to-credit (NTC) customers dropping by 21% by the end of the December 2024 quarter, according to data released by credit information bureau Cibil. Gen Z represented the largest group of NTC borrowers, making up 41% of this segment. At the same time, loans to customers with established credit histories fell by 2%. In December 2023, loan originations to NTC customers were at 21%.

This cautious approach to issuing consumption-led credit products had a significant impact on NTC borrowers, as 40% of NTC consumers choose consumption-driven products—such as credit cards, personal loans, and consumer durable loans—as their entry point into formal credit. Loan originations, which reflect the number of new accounts opened, are influenced by both consumer demand and lender supply.

"The acquisition strategies that lenders have adopted, considering the risk-adjusted returns of unsecured lending products, have disproportionately impacted the New-to-Credit segment, which consists of first-time borrowers," said Bhavesh Jain, MD at TransUnion CIBIL. "We’ve observed that sustainable credit growth can be achieved with NTC consumers by using advanced analytics and technology-driven solutions."


The Credit Market Indicator (CMI), a key measure of credit supply, declined to 91 in December 2024, down from 95 in the same period the previous year.

CIBIL data also revealed that loan originations in the credit card segment fell by 32% for the quarter ending December 2024, compared to a modest 2% growth in the previous year. Home loan originations contracted by 9% in the December 2024 quarter, compared to a 4% increase in the same period the previous year. Personal loan originations saw growth drop to 14% during this period, down from 24% a year ago, while consumer durable loan originations decreased to 6%, compared to 17% the previous year.

Younger generations represented the largest group of NTC borrowers, with Gen Z (born in 1995 or later) making up 41%. Women accounted for 37% of NTC originations, and 32% of NTC consumers came from rural areas.

Additionally, CIBIL data showed that balance-level delinquencies for personal loans have stabilized for the first time since June 2023. The delinquency rate for personal loans more than 90 days past due among below-prime borrowers improved to 4.54% in December 2024, a 31 basis point improvement from 4.85% in December 2023.